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Class : 11
Unit : Business


Explain the types of public enterprises with their features.

Ans : There are three types of public enterprises which are explained below with their features: A. Departmental undertaking B. Public corporations C. Government company A. Departmental undertaking Ans:- Departmental undertaking is an enterprises which is directly managed by department of ministry. All the revenue of enterprises is deposited into Government treasury and payment are made through government budget. All the activities of the enterprises are controlled by the concerned department of the government. In Nepal, postal department is one of the examples of departmental undertaking. Features of Departmental Undertaking i) No separate legal entity:- It has no separate legal entity. It is not registered in its own name. It cannot hold property, borrow loan it is in its own name. All the business activities of the enterprises Veyron in accordance of government rules. ii) Financial activities:- All the financial activities of the enterprises are controlled through Government treasury. It is entirely financed by the treasury and its income is deposited into the treasury. iii) Management and control:- It is directly managed and controlled by the department of the concerned Ministry. The employees of the enterprises are directly responsible to department or ministry. iv) Government rules and regulation:- The departmental undertaking has to follow all the rules and regulation provided by the government. It has to follow the same system for accounting, budgeting and auditing as government. v) Accountability:- These enterprises are accountable to the Parliament through concerned Ministry. They perform their operation according to the rules and regulation enacted by the Parliament. So, that they are accountable to Parliament. B. Public Corporations Ans:- Public corporations are established through special act passed by the Parliament. The objectives natures of business, right, duties are also clarified in the Act. The main motive is not to earn maximum profit what to involve in socio economic welfare of the society. They have separate legal entity. Features of Public Corporations i) Establishment:- It is established by or specific act passed by the Parliament. They define the objectives, right, power, function and responsibilities of the corporation. ii) Government ownership:- It is totally owned by a government. However, some portion of its share capital is also held by the general public. These private shareholders are in a minority. iii) Separate legal entity:- It has separate legal entity full stop it is register in its own name. It can hold property; it is only in its own name. As an artificial person, it has a common seal. iv) Management and control:- It is managed by the board of directors. They can perform work independently without any interruption from government. But finally they are responsible to concern ministry. v) Own employees:- A public corporation has its own employees. They are not civil servants. vi) Service motive:- The main motive of the public corporation is to pursue public welfare activities. It provides quality services rather than economic gain. C. Government Company Ans:- Government company is established according to company act. In Government Company, government invest whole or more than 50% of equity shares. The main motive of formation of such company is to develop economic activities with joint effort of private and public participation. The examples of such companies are Janakpur Cigarette Factory, National Trading Ltd etc. Features of Government Company i) Incorporation:- A government company is incorporated under company Act. It has to complete documentation and other procedure for incorporation according to the requirement of the company act. ii) Ownership:- In government company, government on more than 51% of the equity share capital. It may have joint ownership of the both Government and private sector bought majority of equity shares are held by the government. iii) Separate legal entity:- It has separate legal entity distinct from its owners. It can hold property, make contract, purchase and sales good in its own name. It has a common seal for official documentation. iv) Management and control:- It is managed and controlled by the board of directors. From directors are nominated by the government and others are elected by the shareholders. However, majority of company directors and company chairman are nominated by the government. v) Own employees:- A Government company has its own employees. They are not the civil servant. It provides remuneration and promotional facilities to the employees on the basis of its rules and regulations. vi) Accountable to Parliament:- It is directly accountable to the Parliament through the ministry of commerce and industry. At the end of the fiscal year, it has to submit audited final accounts and other annual report to the parliament.
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